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Nationís Highest Gas Tax Coming To Michigan?
Michigan Capitol Confidential ^ | 2/6/2012 | Jack McHugh

Posted on 02/07/2012 10:49:49 AM PST by MichCapCon

Michigan could potentially have the nation’s highest gas tax if Gov. Rick Snyder’s proposal to replace the state motor fuel tax with a higher wholesale tax becomes law.

As of Jan. 1, motorists here pay 57.8 cents per gallon worth of state and federal taxes, according to the American Petroleum Institute. This includes the 6 percent Michigan sales tax imposed on fuel sales, from which not a dime goes to roads (a small amount goes to subsidize public transportation). Michigan is one of only eight states that impose sales tax on fuel.

The new tax would replace the current 19-cent Michigan motor fuel tax on gasoline with a wholesale tax, initially levied at an effective rate of 28.3 cents per gallon – an immediate 9.3-cent increase. Assuming no other changes, this would put government’s total take per gallon here at 66.1 cents, making Michigan the fourth highest after New York (67.4 cents), Connecticut (67.0 cents) and California (67.0 cents).

But because the new levy would be based on a percentage of the wholesale price, any sustained increase in oil prices would gradually translate into additional gas tax hikes. This would be a double whammy for Michigan motorists, because the 6 percent sales tax already has this effect. For example, if wholesale prices rose by $1 per gallon and stayed there for several years, Michigan drivers would eventually find themselves paying more than 80 cents per gallon in state and federal taxes — by far the highest in the nation (assuming other states stayed the same).

Under the governor’s proposal (see House Bill 5298, sponsored by Rep. Rick Olson, R-Saline, and Senate Bill 918, sponsored by Sen. Roger Kahn, R-Saginaw), the rate of the proposed new tax would be 10.1 percent of the statewide “average wholesale price” over the preceding 12 months. This rate, however, would be subject to various adjustments. The highest the tax could go would be the equivalent of 40.0 cents per gallon, and it could only rise (or fall) by 1 penny per gallon per year (after the initial 9.3-cent increase).

To put this in perspective, as of today the wholesale gasoline “rack price” in Detroit (the price paid when it’s loaded into a tanker truck at the terminal) is around $2.70 per gallon. Retail prices in the region currently average around $3.30.

Gas tax hikes are only one component of Gov. Snyder’s transportation infrastructure proposal. Another piece (House Bill 5300 sponsored by Rep. Jud Gilbert, R-Algonac, and Senate Bill 919 also sponsored by Sen. Kahn) would increase the vehicle registration tax by 67 percent. This license plate tax is levied on the “list price” of a car when new. (As an example, the annual registration tax on a $20,000 car would go from $103 to $172.) Other bills in the package would give counties and a proposed Detroit regional transit authority the power to impose even higher registration taxes, subject to a vote of the people.

No one disagrees that Michigan roads would benefit from an infusion of new resources. Also, gas taxes are the closest thing in government to a pure user fee, which is good because those who pay the tax are (mostly) the ones who benefit from it. The real problem, however, isn’t that the state doesn’t take in enough money, but that it doesn’t properly prioritize the money it does take, and “skims” too much for other purposes.

For example, in addition to the sales tax component mentioned above (none of which goes for roads), some of the remaining money is diverted to subsidize city buses, and some is wasted by mandating above-market wages on road projects through the state's “prevailing wage” law. Another 7/8 of a cent per gallon tax originally intended for leaking underground fuel tank cleanups was diverted in a 2004 “fund raid” to other government spending, and continues to be used that way.

Before reaching deeper into the pockets of motorists, Michigan needs to correct these abuses.


TOPICS: Travel
KEYWORDS: gas; tax

1 posted on 02/07/2012 10:49:58 AM PST by MichCapCon
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To: MichCapCon

About all I can say about this is that I sure as hell hope the denizens of this state don’t emigrate to my state when they figure out they crapped in their own bed.


2 posted on 02/07/2012 10:52:22 AM PST by Gaffer
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To: MichCapCon

“Halftime in America” huh? /s


3 posted on 02/07/2012 10:58:12 AM PST by therightliveswithus
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To: Gaffer
About all I can say about this is that I sure as hell hope the denizens of this state don’t emigrate to my state when they figure out they crapped in their own bed.

That is what you call a forlorn hope. The states surrounding California felt the same way when California went over the edge. But the liberals created a hellhole and then said, "Oh my! This place is becoming a hellhole due to George Bush." And lots of them left California for surrounding states taking their filthy ideology with them. Now the surrounding states are being corrupted under the influence of the transplanted liberals.

4 posted on 02/07/2012 11:08:12 AM PST by 17th Miss Regt
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To: therightliveswithus

Yep, it’s gonna cost more to make those cars coming out of Detrioit roar.


5 posted on 02/07/2012 11:21:12 AM PST by dblshot (Insanity: electing the same people over and over and expecting different results.)
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To: therightliveswithus

It’s the kind of halftime where you deflate the ball, dig trenches on the field, and throw in a cheesy wardrobe malfunction to distract the media.


6 posted on 02/07/2012 11:21:17 AM PST by posterchild (I'm old enough to remember when journalists bothered to look things up on wikipedia.)
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To: 17th Miss Regt

I guess if you then mix in an uncontrolled massive influx of illegal Mexican and South Americans, you’d have a real ideological invasion.


7 posted on 02/07/2012 11:21:21 AM PST by Gaffer
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To: Gaffer

That’s okay, we’ll just get gas in Ohio. If Snyder keeps raising fees and taxes we will be looking into MOVING to Ohio. He’s worse than Jenny.


8 posted on 02/07/2012 11:29:10 AM PST by madison10
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9 posted on 02/07/2012 1:14:06 PM PST by TheOldLady (FReepmail me to get ON or OFF the ZOT LIGHTNING ping list)
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To: MichCapCon

Personally, I don’t mind paying an extra 9 cents per gallon, if it means not having to deal with toll roads that are now charging 25 cents PER MILE, as they do here in Texas, due to our psycho governor, who thinks it’s better to use our highways to fund his cronies, than to find other means.


10 posted on 02/07/2012 6:09:32 PM PST by BobL (I don't care about his past - Newt will BRING THE FIGHT to Obama)
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